Most Minnesota spouses facing divorce know to expect a range of emotional, practical and financial challenges. While people often think of these issues in the immediate terms, the ripple effects of a divorce can echo for years in a person’s financial life. It can be particularly important for newly single people to plan for the future in order to increase their preparedness for retirement, especially since divorce is more highly correlated with difficulties in maintaining a standard of living in the retired years.
The Center for Retirement Research, a study center at Boston College, examined the effects of divorce on retirement risk, an index developed by the center to assess the number of American households that can maintain their financial comfort and security after they stop working. Approximately half of all households across the country face a risk of being unable to keep up that standard if they retire. That risk is higher for divorcees by approximately 7 percentage points.
There are several reasons for this. In the first place, retirement funds are often some of the largest assets dealt with during property division. Depending on the age a person divorces, it can be more difficult to build those assets up to a pre-divorce level before retirement. This can be a particular concern for people who divorce over 50. In addition, there are savings that married people benefit from by combining resources like housing and transit.
Divorce can have ongoing financial impacts throughout a person’s life. That’s why it can be important to deal with these issues during settlement talks. A family law attorney can help a divorcing spouse to achieve a fair settlement in terms of asset division, spousal support and other key matters.